“ONLY IN CANADA” were the three words I couldn’t get out of my head while reading Corus Entertainment’s application to the CRTC to change the Nature of Service (NOS) for its specialty channel OWN.
Stateside, OWN (the Oprah Winfrey Network) has a pretty straightforward history. Daytime talk TV queen Oprah wanted to do something new – start her own cable channel and then step down from her popular TV show. So, she partnered with Discovery Communications and together they rebranded Discovery Health as OWN. The channel has not been the runaway success in the ratings most assumed it would be but it has carriage in 80 million homes Stateside.
There were no “nature of service” terms that Ms Winfrey had to promise the U.S. Federal Communications Commission to alter and improve Discovery Health, no promises to do anything special on the programming front. She and Discovery saw an opportunity, built a business plan and launched a brand new channel on January 1, 2011. To be successful, they must build an excellent, popular channel.
It’s not quite the same here.
OWN in Canada has a far more convoluted, meandering, history. Licensed in 1996 as one of the final analog specialty channels, it launched in 1999 as Canadian Learning Television and was run by majority-held CHUM division Learning and Skills Television of Alberta. Its mandate was to provide a wide range of adult educational programming – perhaps to even help with job training – and it had to be linked to university or college curricula, providing direct learning to Canadian adults. Few watched.
CLT was eventually taken over fully by CHUM and later became a Bell Globemedia property for a short while when it purchased CHUM in 2006 (this was back during Bell’s first stint at owning CTV, remember, before it became just CTVglobemedia for a bit before going back to Bell). In 2008, CTVgm sold CLT to Corus Entertainment for $75 million and Corus promptly re-branded it Viva, aiming it at 40-and-older women. Later, the company signed a licensing deal with Discovery for OWN which supplanted the Viva branding in 2011.
Through all of that, the channel retained its CRTC license demand to provide educational programming to Canadian adults. While the Commission asked a few times for the company to show how Viva, and then OWN, was still an educational specialty and not a lifestyle channel aimed at women – a genre which is still protected from competition under CRTC regulations despite many channels that serve the genre in some way – the Regulator didn’t get an answer with which it was fully satisfied and earlier this year told Corus to either bring the channel into compliance or apply for a new license.
The folks at Corus made the case as best they could over the past two years in several Commission submissions and in front of the Regulator when its licenses were renewed. It insisted that OWN was still fulfilling its mandate as an adult education station, even though most watching the channel see a lifestyle channel aimed at women. The company’s regulatory scribblings hit all the proper-sounding Commission notes. Corus insists that even now, OWN meets its educational license requirements to the letter.
(Now, please bear in mind, dear Corus regulatory staffers reading my scribblings here: This is not meant as a criticism of your work. You are required by regulation to jump through the hoops our system forces you to hop through in order to create a document that lets OWN continue growing. My intent here is to criticise the hoops which need to be altered or obliterated.)
Our regulatory system causes some weird looking statements to appear in submissions. Corus, reads its July application for the license change, rescued CLT from “the brink of failure” when it bought it in 2008. It’s hard to see how that statement jibes with CRTC financial reports which show CLT posted $17.2 million in revenue in the broadcast year ended August 31 2008 with a profit before interest and taxes of $7 million on 5.1 million subscribers. Many specialty channels would kill to be that close to the brink…
Corus also paid $75 million for the channel it insists was in real trouble. That’s not an amount of money paid for something as close to the precipice the company’s submission says it was.
The point is, this is how things are regularly portrayed to the commissioners and their staff who make these regulatory decisions. The usual route is to paint a trail of woe, showing how your company rescued this poor misbegotten channel and only if one more thing could be altered, all would be well and the “public interest would be served” by letting the company go on its merry way. It’s just the usual song and dance.
That one thing Corus wants changed is its license. It wants to be moved from a Category A service to a Category B service and to drop the educational designation. Its must-carry protections which came as part of being a Category A channel would also go but as OWN, it’s unlikely any BDUs will dump the channel, lest they anger the Oprah-loving chunk of their subscriber bases. Corus will quite likely get its new amendment.
Measured by ratings and financial growth, Corus has done a nice job with the channel. CLT was truly a forgotten station during its time at CTVgm. It continued to earn money because it was tied to the must-carry model in Tier III through all that time, but without looking it up, I couldn’t tell you what shows it aired or where it lived in my on-screen guide. Ratings data proved few watched.
However, as long as it had the carriage protections of a legacy analog cable service, it didn’t need ratings more than zero to reliably bring in about $15 to $18 million in revenue every year in subscription dollars. The programming needn’t have mass appeal. It was a must carry and pulled in those desired dollars because if people wanted Food Network or History Television, they had to buy CLT, too. To its credit, Corus took over the channel and has made something of it. It tried to keep it as “educational” as possible by tying it to a few schools, but truly, any programming can be said to be educational on some level and in the 2011 broadcast year, ended August 31st of that year, OWN brought in $6.6 million in ad revenue on top of the $20 million in subscription revenue.
From a strictly TV-business point of view, this is a successful growth story featuring a 57% increase in revenue in three years. Profit also rose by 27% over the same time frame and ratings increased 184%.
However, from a CRTC licensing point of view, some will insist this is a failure. I’d say that thinking is rooted in the weird "norms" our creaking, aged regulations have begot. Back in the mid-1990s, it was clear to many that the next round of specialty licenses would probably be the last analog, must-carry cable licenses handed out and the final real “license to print money” round. These were the third tier of Canadian specialty services, most of which were launched in 1997 (Prime, Headline Sports, HGTV and History Television were among them).
The goal, as I’ve been told by some of the leaders of the day, was to dream up any important-sounding niches or themes that could be CRTC-approved protected cable genres and hope the commissioners granted your specialty channel wish. Actually filling the prime time schedule with programming and hitting your license terms would be figured out later because these channels were guaranteed to make money for their owners.
Heck, looking back at CLT’s first two years of life (it wasn’t launched until 1999) shows a profit line before interest and taxes of $644,000 for the broadcast year ended August 31, 2000 on revenue of $3.9 million – and then $2 million worth of PBIT the following year on $7 million in revenue. Show me a business now which can guarantee that type of immediate return with such little risk and I’ll show you people ready to re-mortgage their homes.
What CLT proved over its years in operation (while broadband developed right alongside of it) is that the old version of educational TV didn’t work. People don’t turn to television for instruction. They go to YouTube. But the channel had carriage and brought in a steady supply of dollars because if you wanted HGTV, for example, you had to pay for CLT. No one watched it, but millions flowed in anyway.
People apparently watch OWN, though, which is reflected in the growth of ad dollars and subscribers. The broadcasters at Corus are apparently doing something right and their license request should be approved. Some will fret loudly about the “integrity of the system” but does all the weird wordplay and illogic of all of this – along with this waste of resources spent on defending a correct and proper change in business strategy required to satisfy ancient regs – sound like its bursting with integrity?
Brands should be able to alter their strategy if the market changes, as it clearly did for CLT, because what’s the option? Make Corus show schoolteachers in classrooms and lose all the gains in ratings, subscribers and profit? Put the channel out to pasture? Of course not. What we’d like to see is a system of entirely rewritten regs flexible enough so that when Canadian media companies need to adapt, they can do so without such a lengthy regulatory workout.
The call for updated regulation is one we’ve made repeatedly. So have others. We hope someone listens one day.
Let us know what you think? Kudos? Criticism? Are we crazy? Let us know at editorial@cartt.ca. We’ll keep it confidential if you ask.
